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Outsourcing, also known as Business Process Outsourcing (BPO), is the process of hiring another individual or company, either domestically or internationally, to handle business activities for you. It is the practice of sending select job functions outside a company, instead of handling them in-house. With the growth of virtual offices and teams, outsourcing continues to grow in popularity. For startups in particular, it is also a strategic way to save money by avoiding the costs of hiring employees that may require a workspace and benefits.
Business owners realize that there are many reasons that companies, both big and small, outsource various jobs. However, the most prominent advantage is the fact that it saves money. Many individuals or companies that provide outsourcing services are able to do the work for considerably less money, as their employees do not require benefits.
Startup companies typically save the most money by using outsourcing services. The most common jobs that are outsourced are administrative jobs such as data entry/processing, customer support, and payroll processing.
Listed below are several critical ways in which outsourcing can save you money:
Lower Costs: Lower costs are the primary reason businesses decide to outsource. Outsourcing allows businesses to operate at a lower cost. Investors view outsourcing positively, as it allows companies to put more capital into revenue producing activities. Outsourcing can deliver significant cost savings in comparison to the cost of in-house services. First, the company can lower the cost of labor. Lower direct salary costs may be applicable if the provider operates from a lower cost location. Second, monthly rental/ mortgage and utility bills can be lowered. The recurring cost of office space rentals historically the largest cost on an income statement. You can save by converting your business to a virtual presence.
Time Zone Difference: There can be some challenges to the time zone difference, but, in the long run, it has a great benefit. Even when a business is closed the work is still getting done and productivity is always moving forward.
Increased productivity and Efficiency: Companies that do everything in-house, have much higher research, development, marketing, and distribution expenses, all of which must be passed on to customers. Whether it is managing employees, offering benefits, meeting payroll, or filing taxes, it is likely there is an outside provider specializing in one or more of these functions. This allows the companies functionality to be handled with greater efficiency, thereby reducing the risk of costly errors.
Ability to Focus: Outsourcing to someone and allowing them to handle your back-office operations and administrative work prevents a company from investing time and energy which can be used towards more important functions. Entrepreneurs have benefited from outsourcing repetitive and redundant tasks, giving them more time and opportunity to focus to grow their businesses,
Start new projects quickly: A good outsourcing firm has the resources to start a project right away. Handling the same project in-house might involve taking weeks or months to hire the right people, train them, and provide the support they need. And if a project requires major capital investments (such as building a series of distribution centers), the startup process can be even more difficult.
For more information about Accretion, or to speak with a member of their team, please contact us at 917.763.1338 or send us email at firstname.lastname@example.org